Posts Tagged ‘living wage’

Who can be against a livable wage and why would they possibly be against it? That’s what this post is about. President Obama raised the minimum wage for Federal contractors from $7.25 to $10.10/hour. It covers future Federal contracts only and therefore won’t affect many workers right now. The President has urged Congress, however, to pass legislation to cover all minimum wage employees in the U.S.

The Congressional Budget Office (CBO) has recently reported that if the minimum wage were to be increased to $10.10 nationwide, or a 40% increase, about 500,000 to 1,000,000 million minimum wage employees, from the current pool of 16,500,000 minimum wage employees, would lose their jobs because employers could not pay it and remain in business. Recently, however, the new proposed minimum wage has jumped to $15/hour. The specific effects of such a raise have not been officially calculated, but it would surely result in millions of “minimum wage employees” losing their jobs because many employers could not afford to pay it and remain in business.

So why do it? The main argument is that it’s not a “living wage,” that no one can live on and raise a family on that wage. Sounds like a reasonable justification but, of course, we need to look at other sides of the argument before reaching sound conclusions. I already cited one of the primary reasons why not to raise the minimum wage too high…the loss of about 1,000,000 minimum wage jobs; however, another significant reason is that it would almost shut down the first step on career ladders for unskilled workers…to the extent that they couldn’t even get that first job, get their foot in the door…because their work would not be worth $15/hour. In addition, since only 15% of minimum wage employees live in poverty households, raising it would do little to reduce poverty. Finally, many businesses, like restaurants, are very sensitive to the minimum wage and when that wage is increased substantially, restaurant prices increase substantially, which hurts the business or makes it fail (so the end result may be the elimination of jobs). Moreover, it’s far more accurate to call “minimum wage” the “starting wage,” because that’s exactly what it is for most people.

It appears that labor union leadership and consequently the Democrat Party is the only beneficiary of dramatic minimum wage increases with everyone else being harmed; therefore, gradual increases in the minimum wage may be able to satisfy genuine concerns of the minimum wage argument.

The best way to raise everyone’s wages the most is to create a booming economy like they have in North Dakota where $15 is the starting wage in fast food restaurants because of the huge competition for employees that North Dakota’s great economy fostered.